We start Monday looking forward to the release corporate earnings and the all-awaited second quarter GDP figures. Making this a busy week for financial news, indeed.
Due to the President’s corporate tax plan, Wall Street traders believe we will see continued better than expected corporate earnings. So far this year, 87 percent of corporations have reported better than expected earnings.
Second quarter GDP estimates hit a high point of 4.8 percent in early June and now sits around 4.5 percent. The combination of strong corporate earnings and a strong GDP number should boost equity prices and keep any rally in the Gold market on hold for the time being. Realistically, investors’ money will always follow the prospects of better returns.
As I indicated last week, Gold traders expect the previous double bottom in the price of Gold
at $1,236 level to be a key level of resistance and the few traders I spoke with this morning
say it will be very difficult to break thru these levels at this time. I’ll take the other side of those expectations given the President’s tough talk on Iran this morning as well as the continuing trade wars talks. Even North Korea rhetoric has increased as Kim Jung Un claims North Korea has met their part of the agreement to stop nuclear testing and have destroyed some of their nuclear facilities, now its America’s turn to lift sections. If you ask me, this sounds like a never ending soap opera.
Nonetheless, I believe these three major issues will eventually derail the Equity markets and turn investors to more safe haven vehicle like Gold and Treasuries. A trade war alone might be enough to stop the Fed from raising rates next year. For the most part, this year’s interest rate increases are baked in to the market. That’s why Gold investors need to be patient, as I expect MUCH higher Gold prices to be a little more than just six months away.
Going forward, it might make sense to use a dollar cost-averaging approach to the gold market assuring the best possible outcome.
Have a wonderful Monday.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.